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Brian Wishneff & Associates LLC v. Delshah Development, Inc.

United States District Court, W.D. Virginia, Roanoke Division

November 8, 2019

BRIAN WISHNEFF & ASSOCIATES LLC, a Virginia limited liability company, Plaintiff,
v.
DELSHAH DEVELOPMENT, INC., a New York corporation, Defendant.

          MEMORANDUM OPINION

          Hon. Glen E. Conrad, Senior United States District Judge.

         Brian Wishneff & Associates LLC ("Wishneff), a Virginia limited liability company, filed this action for breach of contract and quantum meruit against Delshah Development, Inc. ("Delshah"), a New York corporation. Delshah has moved to dismiss the complaint on several grounds, including lack of personal jurisdiction. For the following reasons, the motion will be denied.

         Background

         Wishneff provides tax credit consulting services to real estate developers across the United States. The limited liability company maintains offices in Roanoke and Arlington, Virginia, and each of its members is a Virginia resident. Delshah is a real estate development corporation based in New York City. Michael Shah is its president.

         In 2015, Delshah and its affiliates were involved in several real estate development projects in New York City for which Delshah was interested in obtaining historic tax credits. Delshah learned about Wishneff from another entity, Higgins Quasebarth & Partners LLC ("Higgins Quasebarth"). Delshah initiated contact with Wishneff, either directly or through Higgins Quasebarth. In August of 2015, Erik Wishneff ("Erik"), the plaintiffs vice president and general counsel, met with Shah at Delshah's New York office, where they discussed Wishneff s potential role as a tax credit consultant. At the end of the meeting, Shah asked Erik to send him a term sheet. Over the next several weeks, the parties negotiated a consulting agreement via telephone and email.

         On September 30, 2015, Wishneff formally entered into the Delshah Development Tax Credit Agreement (the "Agreement") with Delshah Development or its assignee, [1] pursuant to which Wishneff agreed to assist the developer in obtaining historic tax credits to redevelop certain New York properties. The Agreement, which was prepared by Wishneff, describes the scope of consulting work to be performed and the agreed-upon fee arrangement. At Delshah's request, Wishneff agreed to include a New York choice-of-law clause. See Agreement 8, Dkt. No 11-2 ("The provisions of this Agreement shall be subject to and construed and enforced in accordance with the laws of the State of New York."). Wishneff also added the following waiver provision in a separate paragraph:

6. Waiver of Jury Trial. The parties to this agreement hereby waive trial by jury and waive any objection which they may have based on lack of jurisdiction or improper venue or forum non conveniens to the conduct of any action instituted hereunder, or arising out of or in connection with this agreement....

Id. (capitalization omitted).[2] The Agreement identifies Wishneff as a "Virginia limited liability company located in Roanoke, Virginia," and requires that any notices be sent to its Roanoke office address. Id. at 2, 9.

         Although the Agreement does not designate a place of performance, the record indicates that most of Wishneff s consulting services were performed from its offices in Virginia. According to a sworn affidavit from Erik, "the Defendant and its agents placed several hundred calls to Plaintiffs phone numbers in Virginia," during which Wishneff "educated Defendant on the details of the tax credit programs, including how to structure transactions ... to maximize tax credit qualifications." Erik Aff. ¶ 10, Dkt. No. 15. Delshah also "called Plaintiff in Virginia for advice on marketing efforts for potential tax credit investors, including legal and financial structuring, due diligence, and closing calls with prospective investors . . . ." Id. In addition to communicating by telephone, "the Defendant and its agents sent thousands of e-mails to Plaintiffs servers in Virginia concerning all aspects of the project." Id. ¶ 12; see also Shah Decl. ¶ 16, Dkt. No. 11-1 (acknowledging that Shah and other Delshah employees engaged in a "substantial number of communications ... with Erik Wishneff”).

         By letter from counsel dated January 22, 2019, Delshah notified Wishneff of its intention to terminate the Agreement (the "Termination Letter"). In the Termination Letter, which was sent by Federal Express to Wishneff s addresses in Roanoke and Arlington, Delshah asserted that "Wishneff failed to perform the duties as required by the agreement and breached its contract." Termination Ltr. 2, Dkt. No. 11-4. Based on Wishhneffs alleged "failure of consideration," Delshah further asserted that Wishneff was not entitled to be paid the fees contemplated under the Agreement, and that Delshah had no "desire for Wishneff to continue as a consultant to the project for future phases." Id.

         One day later, on January 23, 2019, Delshah filed a summons with notice in New York state court against Wishneff.[3] The summons with notice described the "Nature of the Action" as follows:

The nature of this action is a claim for money damages as well as declaratory relief relating to a "Tax Credit Agreement" dated September 30, 2015 ("Agreement"), all pertaining to real estate transactions in New York County, that the defendant breached the Agreement including the failure of consideration, that the Agreement has been terminated, and that plaintiff incurred damage in the amount of no less than $500, 000.00, together with interest, contractual attorneys' fees, costs and disbursements of this action.

Summons with Notice 1, Dkt. No. 11-5.

         Approximately four weeks later, on February 22, 2019, Wishneff filed the instant action in this court against Delshah. Wishneff claims that it substantially performed all of the services required under the Agreement and that Delshah breached the Agreement by failing to pay Wishneff for the services provided. Alternatively, Wishneff maintains that it is entitled to recover under a theory of quantum meruit.

         On April 25, 2019, Delshah moved to dismiss the complaint on several grounds, including lack of personal jurisdiction. In support of the motion, Delshah submitted Shah's declaration and several exhibits. Thereafter, the court scheduled a hearing on the motion and adopted the adjusted briefing schedule agreed to by the parties. On May 22, 2019, Wishneff filed a brief in opposition to the motion to dismiss, along with a sworn affidavit from Erik. The court held a hearing on the motion on July 15, 2019.

         Following the hearing, the defendant submitted the complaint filed in New York state court as a supplemental exhibit. The exhibit indicates that the complaint was filed on July 16, 2019, nearly seven months after Delshah filed its summons with notice.

         Discussion

         In the pending motion, Delshah primarily argues that the complaint is subject to dismissal for lack of personal jurisdiction. In the alternative, Delshah contends that the complaint should be dismissed under the prior-pending-action doctrine or the Colorado River[4] abstention doctrine. The court will address each argument in turn.

         I. Personal Jurisdiction

         Rule 12(b)(2) of the Federal Rules of Civil Procedure authorizes dismissal for lack of personal jurisdiction. Under this rule, "a defendant must affirmatively raise a personal jurisdiction challenge, but the plaintiff bears the burden of demonstrating personal jurisdiction at every stage following such challenge." Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016). "The plaintiffs burden in establishing jurisdiction varies according to the posture of a case and the evidence that has been presented to the court." Id. at 268. For instance, "when the parties have not yet had a fair opportunity to develop and present the relevant jurisdictional evidence," plaintiffs need only make a prima facie showing of personal jurisdiction. Sneha Media & Entm't LLC v. Associated Broad. Co. P Ltd., 911 F.3d 192, 196-97 (4th Cir. 2018). However, "when, as here, the court does not preclude the parties from pursuing jurisdictional discovery, and holds a hearing at which ...


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